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Korea's economy, Japan's youth and Ireland

Published: 13 Feb. 2025, 00:00

Sohn Hae-yong

Sohn Hae-yong
The author is the business news editor of the JoongAng Ilbo.

Last year, 29-year-old Konatsu Ishigami arrived in Korea on a working holiday visa. “I wanted to work abroad, and I chose Korea because it feels culturally and socially familiar, and has a ‘hip’ vibe,” she said. Currently, Ishigami works as a server at a Japanese restaurant in Gangnam, southern Seoul. Runa Aramachi, a 27-year-old student at Soongsil University, makes a living by translating and introducing Korean company products in Japanese as a part-time job. “Aside from Tokyo, Korea’s salary levels are actually higher,” she explained.

More Japanese youth are now working at Korean companies, restaurants and clothing stores. There’s even a growing business that helps them find housing and tutoring jobs in Japanese. According to recent statistics from the Ministry of Justice’s Immigration and Foreign Policy Headquarters, the number of Japanese nationals residing in Korea on long-term visas increased by 31.2 percent from 22,695 at the end of 2020 to 29,778 at the end of last year. The actual number is likely higher when considering those who enter Korea visa-free and take up short-term jobs.

This doesn’t necessarily mean that Korea’s job market or national appeal has surpassed Japan’s. In absolute terms, more Koreans still work in Japan, and Japan remains an advanced nation with much Korea can learn from. However, in the early 2000s, the job-seeking tide overwhelmingly flowed in the opposite direction, with significantly more Korean youths heading to Japan. At the time, young Koreans were often humiliated at Japanese airports, suspected of entering illegally for employment. The change in circumstances now is striking.

Interest in K-content like K-pop and K-dramas has grown, and Korea shares cultural, social and linguistic similarities with Japan. It is geographically the closest country to Japan, and the recent improvement in Korea-Japan relations has played a role. However, the biggest factor is Korea’s growing economic power.

According to the International Monetary Fund (IMF), Japan’s per capita GDP declined from $49,175 in 2012 to $33,899 in 2023. Meanwhile, Korea’s per capita GDP rose from $26,600 to $35,563 during the same period. While Japan’s economy was once more than three times the size of Korea’s in 2000, Korea has now surpassed it. Japanese workers interviewed by the JoongAng Ilbo noted that, unlike in the past when there was a significant gap, economic and IT levels are now nearly identical. Additionally, the weak yen has made Korean wages more attractive in relative terms. According to the Korea Employers Federation, in 2022 the average monthly salary in Korea was 3.99 million won ($2,745), higher than Japan’s 3.79 million won. While Japanese companies have stagnated, Korean companies have made continuous strides forward.

However, whether this trend will continue is uncertain. Signs of “Peak Korea” — the idea that Korea’s economic growth has peaked and is now on a downward trajectory — are becoming more evident. GDP growth rates for the second to fourth quarters of last year compared to the previous quarter indicated nearly three quarters of stagnation. Korea’s major export industries have reached their growth limits, and the country is increasingly falling behind in AI and other advanced IT sectors. Moreover, the population, which once provided labor and sustained domestic consumption, is now declining. The phrase “Korea has reached the pinnacle of its 5,000-year history and is now on a downward slope” is not without reason.

A recent survey by the Federation of Korean Industries (FKI) of 111 economics professors found that two-thirds agreed with the “Peak Korea” argument. The top two risks cited were a demographic cliff due to low birthrates and an aging population and a lack of new growth engines. The professors proposed that the government should focus on supporting corporate investment and research and development (R&D), improving regulations, resolving conflicts in emerging industries and enhancing labor market flexibility.

Simply put, they are calling for an environment where companies can invest and operate freely — prescriptions that many experts have already suggested. However, implementation is hindered by certain politicians who are more focused on antibusiness and pro-labor union ideologies, burdening companies with excessive regulations.

Korea should take a closer look at Ireland, a country that shares a history of colonial rule by a neighboring power. In 2003, Ireland surpassed Britain in per capita GDP, commemorating the achievement by erecting “Dublin Spire” in its capital’s downtown area. In 1980, Ireland’s per capita GDP was only 60 percent of Britain's, but as of 2023, it has soared to $103,465 — more than double that of Britain — making Ireland one of the wealthiest nations in the world.

Ireland’s dramatic economic rise was driven by pro-business policies, one of the world’s lowest corporate tax rates, a stable and predictable regulatory and tax environment and labor market stability following the 1987 “Social Partnership” agreement. As a result, Ireland has become a European hub for leading global tech, finance and pharmaceutical companies. In the past, young Irish workers left for Britain in search of jobs, but now, top talents from across Europe are flocking to Ireland. The Irish example demonstrates that fostering a business-friendly environment is the key to economic growth and talent attraction.

Translated using generative AI and edited by Korea JoongAng Daily staff.